The IRS changed the rules for the standard mileage rate in 2018 because of the new tax law (the rates themselves are unchanged from 2017) in Notice 2018-3. Now the IRS is making the following changes to this notice:
- The standard mileage rate for moving expenses can be used only by members of the Armed Forces on active duty moving because of a permanent change of station. No one else can deduct moving expenses.
- Employees who drive their personal vehicles for company business and who are not reimbursed by their employer cannot use the standard mileage rate (or any other method) to take a deduction on their 1040 because all miscellaneous itemized deductions are suspended from 2018-2025.
- The standard mileage rates still can be used to deduct business travel (other than unreimbursed employee expenses), medical travel and mileage incurred in the service of charitable organizations.
- The new law makes more vehicles eligible for the fixed and variable rate (FAVR) plan. Previously, FAVR could be used only for passenger cars costing up to $27,300, and trucks and vans costing up to $31,000. Now, it can be used for cars, vans or trucks costing up to $50,000—if placed in service after Dec. 31, 2017.
Reminders: A vehicle for which a §179 deduction has been taken or that has been depreciated for tax purposes is not eligible for the standard mileage rate. Nor can the standard mileage rate be used for more than four vehicles simultaneously. [IR-2018-127]